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SABMiller Will Boost Southern Sudan Output to Ward Off Diageo Competition

Discussion in 'International Forum' started by Geza Ulole, Aug 7, 2010.

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    Geza Ulole JF-Expert Member

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    SABMiller Will Boost Southern Sudan Output to Ward Off Diageo Competition

    By Alan Boswell - Aug 6, 2010
    SABMiller Plc, the world's second- biggest brewer by volume, said it plans to raise output by 52 percent at its Southern Sudanese plant this year to ward off competition from Diageo Plc's unit in neighboring Kenya.
    The company is seeking to capitalize on demand that resulted in beer sales in Southern Sudan growing by double digits every month over the past year, said Ian Alsworth-Elvey, managing director of Southern Sudan Beverages Ltd., or SSBL.
    "I don't think this market is big enough to sustain two brewing companies," Alsworth-Elvey said in an interview on Aug. 4 in the Southern Sudanese capital, Juba.
    SABMiller last year spent $400 million opening four new breweries in sub-Saharan Africa, including operations in Mozambique, Angola and Tanzania. The London-based company generates about 12 percent of its earnings in Africa.
    Southern Sudan gained autonomy from Sudan under a 2005 peace accord that ended a 21-year civil war in which 2 million people died. SSBL's brewery, which manufactures the "White Bull" and "Chairman's Extra Strong Beer" brands, was the first to open in Southern Sudan when it began operating in May 2009.
    SSBL competes with products manufactured by East African Breweries Ltd., Kenya's second-biggest company by market value and in which Diageo owns a 43 percent stake.
    "We are continuing to erode their market share," Alsworth- Elvey said. SSBL estimates its current share of Southern Sudan's beer market is between 55 percent and 65 percent, he said.
    Rival Factory
    East African Breweries plans to build a 700,000-hectoliter (18.5 million-gallon) plant in Juba, Wycliffe Masinde, an analyst at Nairobi-based Kestrel Capital East Africa Ltd., said in a May 31 e-mailed note to clients.
    "We are in negotiations with the government of Sudan to solidify our presence in the region," Ken Kariuki, corporate affairs director at East African Breweries, said in a mobile- phone text message yesterday. "At the moment it is too early for me to give specifics."
    Last month, Diageo said it will increase marketing spending next year in developing regions to counter an uncertain economic outlook in the U.S. and Europe.
    Brewing capacity at SSBL's factory will be expanded to 350,000 hectoliters by December, from 230,000 hectoliters at present, Alsworth-Elvey said.
    SSBL also has a 400,000-hectoliter plant for producing soft drinks, which it began selling in October 2009, and 70,000 hectoliters of bottled water.
    Sales Forecast
    While Alsworth-Elvey declined to give more specific sales figures for SSBL's operations, he said that in the first three months of the current financial year, which began on April 1, "we sold more than in the first 8 months of the previous financial year." Full-year sales are expected to increase 75% from a year earlier, he said.
    SSBL will start a partnership this month with FARM-Africa, a U.K.-based aid organization, to grow cassava or sorghum in Southern Sudan for beer production. The program will take about a year to set up, Alsworth-Elvey said.
    SABMiller said last year that using domestic ingredients could allow the company to slash the price of a beer by 30 percent in Africa.
    Southern Sudanese will vote in a referendum in January on whether to secede from Sudan, an event that Alsworth-Elvey said he expected to be backed by voters, resulting in the creation of a new state.
    Whatever the result of the referendum, Alsworth-Elvey said the company has no plans to quit its operations in Southern Sudan.
    "We are here for the long run," he said.

    SABMiller Will Boost Southern Sudan Output to Ward Off Diageo Competition - Bloomberg

    MY TAKE: Let the beer war proceed
     
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    nomasana JF-Expert Member

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    this fight has played out in several places and diageo most times gets what it wants through the east african breweries. the only way i see sabmiller winning this turf war is if sabmiller sells good cheap beer.

    nway the war between these two is always facinating
     
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    Mzee2000 JF-Expert Member

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    Correction

    SABMiler is a south african company.
     
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    Geza Ulole JF-Expert Member

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    keep dreaming do you know EA Brew market share in UG right now? do you know how their profit has shrunk? how can you dare to say EABL wins always? EABL has only Kenyan market (which is stagnant) under control in EA! it is a minor company in Ug, TZ, Ethiopia and SS for your info. And they are about to enter in Kenya home ground of EABL!
     
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    nomasana JF-Expert Member

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    ok buddy, sabmiller will take over the whole of kenya.
     
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